In the last two weeks, we have seen news about both Freenotes and Zuke’s relocating substantial portions of their business to other states.
This is unfortunate, but also part of a broader challenge rural economies – like Durango’s – face.
As a military child, I was born in a town in west Texas that barely exists anymore. When I was 5, we moved to an old factory town in the Erie Valley named Rome, New York. About two years after we moved there, the copper wire mill closed, laying off hundreds of people – including my best friend’s father – and forever changing the face of the community.
Seeing what happened to Rome is the reason why I went into economic development, and why my true passion is the viability of rural towns. Trump’s election in 2016 brought national attention to the plight of rural America. And to their credit, partisans on both sides have valid points to make.
Liberals are correct that cities are naturally ascendant. “Agglomeration economics” explain why the global economy has been shifting toward cities for centuries and will continue to do so as far as we can see.
Conservatives also have a point that many regulations punish the small businesses that anchor small towns. It is unfair when regulations, created to prevent abuse at large corporations, hurt small businesses and small towns instead.
But a third element has also been undermining rural economies, and that is industry consolidation.
Whether it is oligopolies like the airlines that cut service and raise prices, or the acquisition of local firms by national ones, consolidation often drives good jobs out of small towns. Out here, I have seen exorbitant airfares cause companies to move jobs to Denver, and acquisitions pull beloved small local businesses to other states as well.
Not every acquisition means a company leaves – Matt Taylor spoke at the Alliance’s Economic Summit about the economic value that the Durango office brings to Vantiv, and Vantiv has just launched a new division right here in town. But in general, acquisitions make people in cities like Durango nervous for good reason.
Companies like Freenotes, Zuke’s, Vantiv, Tailwind Nutrition and StoneAge are called “primary employers.” That means they mainly sell to national and international customers. They provide some of the best jobs around, grow our tax base and, with their employees, generously donate to our nonprofits, schools and sports leagues. Retaining local ownership of primary employers needs to be a broader part of the rural economic discussion.
Locally, we have a great start-up environment thanks to the hard work of Region 9 Economic Development, Southwest Colorado Small Business Development Center and Southwest Colorado Accelerator Program for Entrepreneurs. They help create tomorrow’s businesses for our region.
But as these start-ups grow, one other thing we can do is be advocates for them. There are too many reasons why it makes sense to do business elsewhere. A positive, engaging, and helpful approach when these companies seek to expand can be the difference between them adding their next 20 or 30 good paying jobs here, adding those jobs elsewhere or leaving our region altogether.
Roger Zalneraitis is executive director of La Plata County Economic Development Alliance. Reach him at email@example.com or 259-1700.